Home Depot shows it has faith in a housing market rebound

A lot of people have been waiting for a housing market recovery. And so far, 2026 has not delivered.

New U.S. home sales plunged 17.6% in January to an annual rate of 587,000, the lowest level since October 2022, as reported by Reuters citing data from the Commerce Department’s Census Bureau.

The reason the market has been so sluggish boils down to affordability.

Home buyers are facing a wicked combination of elevated mortgage rates, higher home prices, and limited inventory. 

Many homeowners these days are locked into the lower rates they secured in the years following the pandemic. As such, a lot of people are reluctant to sell, and understandably so.

That’s created a housing market where there’s such limited inventory that sellers who are listing homes can get away with commanding higher prices. 

Home Depot CFO Richard McPhail said recently that consumers and the company alike have been operating in a “frozen housing environment” since 2023. And it could be a while until conditions improve.

Home Depot has felt the slowdown

If there’s one company that’s apt to feel the pain of a sluggish housing market, it’s Home Depot.

The company recently reported declining sales, with revenue in its most recent quarter falling 3.8% year over year. And while comparable sales held up better than expected, transactions fell 1.6% year over year in the quarter.

Neil Saunders, managing director at GlobalData, commented, “The market did not play ball… with the number of projects undertaken down by 1.5%, mostly driven by a sharp decline in bigger-ticket projects,” as reported by Axios.

“For the fourth quarter, our results were largely in-line with our expectations, reflecting the lack of storm activity in the third quarter and ongoing consumer uncertainty and pressure in housing,” said Home Depot CEO Ted Decker.

Of course, Home Depot doesn’t just rely on home sale activity for business. It also counts on existing homeowners to undertake projects.

But given today’s shaky economic conditions, homeowners may be inclined to cut back on discretionary projects or improvements and focus on simply making repairs instead. That puts Home Depot in a very tough spot. 

Home Depot hasn’t given up on a housing market rebound

Despite a sluggish housing backdrop and muted sales growth, Home Depot is making plans to expand its store footprint. In March, the company announced that it would be adding 12 new stores across eight states to its U.S. footprint. 

“This growth will create thousands of career opportunities and boost local economies from the Southern California coast to the Florida peninsula,” the announcement said.

Reading between the lines, the message is clear. Home Depot clearly believes there’s enough demand to support an additional 12 stores in the near term. 

And let’s remember that opening stores isn’t a decision to take lightly, even for an established business like Home Depot. Opening new stores requires significant capital, long-term planning, and confidence in future demand. By moving forward now, Home Depot is effectively signaling that it expects the housing market and home improvement sector to rebound over time.

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Of course, at this point, the timeline for a recovery is pretty unclear. 

There were signs of a potential housing rebound late last month when mortgage rates finally fell below the 6% mark. They’ve since reversed course in the wake of the Iran conflict.

But all told, Home Depot seems fairly confident that the housing market will, in time, get to a better place. That’s something prospective home buyers can take some comfort in.

Related: Walmart sees troubling shift in consumer behavior